Reporting recharacterizations
I recharacterized an $8000 2023 Roth contribution into a nondeductible traditional IRA contribution in early January 2024. The recharacterized contribution amount was $8,491. I subsequently backdoored that into my Roth IRA. After that I made an $8000 2024 nondeductible contribution to a traditional IRA and then subsequently backdoored that into my Roth. I have received a 2024 1099-R from Vanguard for my IRA activity with a gross distribution amount of $16,275. I am wondering how to report this for my 2024 taxes. As I use TaxAct I can easily report my 2024 nondeductible contribution to a traditional IRA. What about the recharacterization? I do see a form for explaining a recharacterization. but then it seems that I should be paying taxes on either $491 or $275. Any help would be most appreciated. Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2025-02-20 19:19
Your taxable income for the conversions is 275, as you have IRA basis of 16,000. You should have filed a 2023 8606 to report that 8000 ND contribution which carries forward to line 2 of your 2024 8606 and is added to your 2024 ND contribution.
Most likely your recharacterization transfer of 8491 dropped to a value of 8275 before you converted it. That would explain why the conversion 1099R showed 16,275 instead of 16,491.
Permalink Submitted by Michael Suman on Wed, 2025-02-26 19:20
Thanks so much, Alan!